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Arrow Electronics Reports Second-Quarter 2023 Results

-- Second-Quarter Earnings Per Share of $4.12; Non-GAAP Earnings Per Share of $4.37 --

-- Revenue in line with guidance; Non-GAAP EPS above midpoint of guidance --

Arrow Electronics, Inc. (NYSE:ARW) today reported second-quarter 2023 sales of $8.51 billion, a decrease of 10 percent year over year. Second-quarter net income was $237 million, or $4.12 per share on a diluted basis, compared with net income of $370 million, or $5.54 per share on a diluted basis, in the second quarter of 2022. Non-GAAP net income1 was $251 million, or $4.37 per share on a diluted basis, in the second quarter of 2023, compared with non-GAAP net income of $386 million, or $5.78 per share on a diluted basis, in the second quarter of 2022.

“The company posted solid second-quarter results in a softer semiconductor market and a mixed information technology spending environment, delivering revenue and earnings per share within our guidance range,” said Sean Kerins, Arrow’s president, and chief executive officer.

Global components second-quarter sales of $6.68 billion reflected a decrease of 10 percent year over year. Europe components second-quarter sales increased 19 percent year over year. Asia-Pacific components second-quarter sales decreased 22 percent year over year. Americas components second-quarter sales decreased 17 percent year over year. Global components second-quarter operating income was $381 million, and second-quarter non-GAAP operating income was $388 million.

“While demand in the west broadly remained resilient, customer inventory levels were elevated in the quarter. Americas components results were impacted by further declines in the shortage market, which we now believe to be largely normalized. In Asia, we experienced continued demand softness in China,” said Mr. Kerins. “We were encouraged by our sequential inventory reduction, pricing stability and growth in design-related activity.”

Global enterprise computing solutions (ECS) second-quarter sales of $1.83 billion reflected a decrease of 8 percent year over year. Europe enterprise computing solutions second-quarter sales decreased 1 percent year over year. Americas enterprise computing solutions second-quarter sales decreased 14 percent year over year. Global enterprise computing solutions second-quarter operating income was $86 million, and second-quarter non-GAAP operating income was $87 million.

“We continue to see customers migrate to solutions delivered on an as-a-service basis. Our ECS results reflect this trend as we saw relative strength in cloud, software and services, and improved operating margin year over year,” said Mr. Kerins.

“Reflecting our confidence in our ability to generate cash and consistent with our desire to drive shareholder returns, we repurchased approximately $200 million of shares during the second quarter,” said Raj Agrawal, senior vice president and chief financial officer. “As of the end of the second quarter, our remaining repurchase authorization stands at approximately $824 million.”

1 A reconciliation of non-GAAP financial measures to GAAP financial measures is presented in the reconciliation tables included herein.

THIRD-QUARTER 2023 OUTLOOK

  • Consolidated sales of $7.78 billion to $8.38 billion, with global components sales of $6.00 billion to $6.40 billion, and global enterprise computing solutions sales of $1.78 billion to $1.98 billion
  • Net income per share on a diluted basis of $3.25 to $3.45, and non-GAAP net income per share on a diluted basis of $3.40 to $3.60
  • Average tax rate in the range of 23 to 25 percent
  • Average diluted shares outstanding of ~56 million
  • Interest expense in the range of $85 million to $90 million
  • Changes in foreign currencies expected to increase year-over-year growth in sales by $212 million, and earnings per share on a diluted basis by $0.11 compared to the third quarter of 2022
  • Changes in foreign currencies expected to increase quarter-over-quarter growth in sales by $42 million and earnings per share on a diluted basis by $0.04 compared to the second quarter of 2023
  • On a constant currency basis, our third-quarter sales guidance implies a sequential growth rate range of down 11 percent to down 5 percent for global components and down 4 percent to up 7 percent for global enterprise computing solutions, when compared to the second quarter of 2023

Third-Quarter 2023 GAAP to non-GAAP Outlook Reconciliation

NON-GAAP SALES RECONCILIATION

 

Quarter Ended

 

 

 

Quarter Ended

 

 

(in billions)

September

30, 2023

 

October 1,

2022

 

% Change

 

September

30, 2023

 

July 1, 2023

 

% Change

 

 

 

 

 

 

 

 

 

 

 

 

Global components sales, GAAP

$6.00-6.40

 

$7.30

 

(18%) - (12%)

 

$6.00-6.40

 

$6.68

 

(10%) - (4%)

Impact of changes in foreign currencies

 

0.14

 

 

 

 

0.03

 

 

Global components sales, constant currency

$6.00-6.40

 

$7.44

 

(19%) - (14%)

 

$6.00-6.40

 

$6.71

 

(11%) - (5%)

 

 

 

 

 

 

 

 

 

 

 

 

Global ECS sales, GAAP

$1.78-1.98

 

$1.97

 

(10%) - 1%

 

$1.78-1.98

 

$1.83

 

(3%) - 8%

Impact of changes in foreign currencies

 

0.07

 

 

 

 

0.02

 

 

Global ECS sales, constant currency

$1.78-1.98

 

$2.04

 

(13%) - (3%)

 

$1.78-1.98

 

$1.85

 

(4%) - 7%

NON-GAAP EARNINGS RECONCILIATION

 

Reported GAAP measure

Intangible amortization

expense

Restructuring &

integration charges

Non-GAAP measure

Net income per diluted share

$3.25 to $3.45

$0.10

$0.05

$3.40 to $3.60

CFO Commentary and Earnings Presentation

Please refer to the CFO commentary and the earnings presentation, which can be found at investor.arrow.com, as a supplement to the company’s earnings release. The company uses its website as a tool to disclose important information about the company and to comply with its disclosure obligations under Regulation Fair Disclosure.

Conference Call and Webcast Information

Arrow Electronics will host a conference call to discuss second-quarter 2023 financial results on Aug. 3, 2023, at 1:00 PM ET. Register online at https://conferencingportals.com/event/fEoxDDHd to obtain dial-in information to access the live conference call. The conference call will also be available via live webcast at investor.arrow.com. Shortly after the conclusion of the conference call, a webcast replay will be available at investor.arrow.com.

About Arrow Electronics

Arrow Electronics guides innovation forward for over 210,000 leading technology manufacturers and service providers. With 2022 sales of $37 billion, Arrow develops technology solutions that help improve business and daily life. Learn more at fiveyearsout.com.

Information Relating to Forward-Looking Statements

This press release includes “forward-looking” statements, as the term is defined under the federal securities laws, including but not limited to statements regarding: Arrow’s future financial performance, including its outlook on financial results for the third quarter of fiscal 2023 such as sales, net income per diluted share, non-GAAP net income per diluted share, average tax rate, average diluted shares outstanding, interest and other expense, impact to sales due to changes in foreign currencies, intangible amortization expense per diluted share, restructuring & integration charges per diluted share, and expectations regarding market demand and shareholder returns. These and other forward-looking statements are subject to numerous assumptions, risks, and uncertainties, which could cause actual results or facts to differ materially from such statements for a variety of reasons, including, but not limited to: unfavorable economic conditions; disruptions or inefficiencies in the supply chain; political instability; impacts of military conflict and sanctions; industry conditions; changes in product supply, pricing and customer demand; competition; other vagaries in the global components and the global ECS markets; deteriorating economic conditions, including economic recession, inflation, tax rates, foreign currency exchange rates, or the availability of capital; the effects of natural or man-made catastrophic events; changes in relationships with key suppliers; increased profit margin pressure; changes in legal and regulatory matters; non-compliance with certain regulations, such as export, antitrust, and anti-corruption laws; foreign tax and other loss contingencies; outbreaks, epidemics, pandemics, or public health crises; and the company's ability to generate cash flow. For a further discussion of these and other factors that could cause the company's future results to differ materially from any forward-looking statements, see the section entitled “Risk Factors” in the company's most recent Quarterly Report on Form 10-Q and the company's most recent Annual Report on Form 10-K, as well as in other filings the company makes with the Securities and Exchange Commission. Shareholders and other readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date on which they are made. The company undertakes no obligation to update publicly or revise any of the forward-looking statements.

Certain Non-GAAP Financial Information

In addition to disclosing financial results that are determined in accordance with accounting principles generally accepted in the United States (“GAAP”), the company also provides certain non-GAAP financial information. The company provides non-GAAP sales, operating income, income before income taxes, provision for income taxes, consolidated net income, noncontrolling interests, net income attributable to shareholders, effective tax rate and net income per share on a diluted basis, which are non-GAAP measures adjusted for the impact of changes in foreign currencies (referred to as "changes in foreign currencies" or "on a constant currency basis") by re-translating prior-period results at current period foreign exchange rates, identifiable intangible asset amortization, restructuring, integration, and other charges, net gains and losses on investments, and impact of tax legislation changes. Management believes that providing this additional information is useful to the reader to better assess and understand the company’s operating performance and future prospects in the same manner as management, especially when comparing results with previous periods. Management typically monitors the business as adjusted for these items, in addition to GAAP results, to understand and compare operating results across accounting periods, for internal budgeting purposes, for short- and long-term operating plans, and to evaluate the company's financial performance. However, analysis of results on a non-GAAP basis should be used as a complement to, in conjunction with, and not as a substitute for, data presented in accordance with GAAP.

ARROW ELECTRONICS, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands except per share data)

(Unaudited)

 

 

 

 

 

 

 

 

 

Quarter Ended

 

Six Months Ended

 

July 1, 2023

 

July 2, 2022

 

July 1, 2023

 

July 2, 2022

 

 

 

 

 

 

 

 

Sales

$

8,514,516

 

 

$

9,460,842

 

 

$

17,250,944

 

 

$

18,534,967

 

Cost of sales

 

7,448,467

 

 

 

8,224,628

 

 

 

15,071,073

 

 

 

16,091,249

 

Gross profit

 

1,066,049

 

 

 

1,236,214

 

 

 

2,179,871

 

 

 

2,443,718

 

Operating expenses:

 

 

 

 

 

 

 

Selling, general, and administrative expenses

 

617,202

 

 

 

653,640

 

 

 

1,259,633

 

 

 

1,297,565

 

Depreciation and amortization

 

46,264

 

 

 

47,252

 

 

 

92,943

 

 

 

95,557

 

Restructuring, integration, and other charges

 

10,333

 

 

 

2,494

 

 

 

12,893

 

 

 

7,392

 

 

 

673,799

 

 

 

703,386

 

 

 

1,365,469

 

 

 

1,400,514

 

Operating income

 

392,250

 

 

 

532,828

 

 

 

814,402

 

 

 

1,043,204

 

Equity in earnings of affiliated companies

 

3,061

 

 

 

2,165

 

 

 

2,981

 

 

 

3,008

 

Gain (loss) on investments, net

 

497

 

 

 

(9,744

)

 

 

10,808

 

 

 

(7,733

)

Employee benefit plan expense, net

 

(803

)

 

 

(835

)

 

 

(1,656

)

 

 

(1,724

)

Interest and other financing expense, net

 

(84,834

)

 

 

(38,506

)

 

 

(164,492

)

 

 

(72,491

)

Income before income taxes

 

310,171

 

 

 

485,908

 

 

 

662,043

 

 

 

964,264

 

Provision for income taxes

 

72,380

 

 

 

114,413

 

 

 

148,927

 

 

 

226,773

 

Consolidated net income

 

237,791

 

 

 

371,495

 

 

 

513,116

 

 

 

737,491

 

Noncontrolling interests

 

1,232

 

 

 

1,161

 

 

 

2,807

 

 

 

2,408

 

Net income attributable to shareholders

$

236,559

 

 

$

370,334

 

 

$

510,309

 

 

$

735,083

 

Net income per share:

 

 

 

 

 

 

 

Basic

$

4.17

 

 

$

5.60

 

 

$

8.84

 

 

$

10.98

 

Diluted

$

4.12

 

 

$

5.54

 

 

$

8.74

 

 

$

10.84

 

Weighted-average shares outstanding:

 

 

 

 

 

 

 

Basic

 

56,720

 

 

 

66,078

 

 

 

57,726

 

 

 

66,964

 

Diluted

 

57,355

 

 

 

66,851

 

 

 

58,409

 

 

 

67,797

 

ARROW ELECTRONICS, INC.

CONSOLIDATED BALANCE SHEETS

(In thousands except par value)

(Unaudited)

 

 

 

 

 

July 1, 2023

 

December 31, 2022

 

 

 

 

ASSETS

 

 

 

Current assets:

 

 

 

Cash and cash equivalents

$

240,382

 

 

$

176,915

 

Accounts receivable, net

 

11,035,898

 

 

 

12,322,717

 

Inventories

 

5,452,198

 

 

 

5,319,369

 

Other current assets

 

402,729

 

 

 

521,339

 

Total current assets

 

17,131,207

 

 

 

18,340,340

 

Property, plant, and equipment, at cost:

 

 

 

Land

 

5,691

 

 

 

5,691

 

Buildings and improvements

 

186,648

 

 

 

184,211

 

Machinery and equipment

 

1,612,005

 

 

 

1,583,661

 

 

 

1,804,344

 

 

 

1,773,563

 

Less: Accumulated depreciation and amortization

 

(1,246,125

)

 

 

(1,177,107

)

Property, plant, and equipment, net

 

558,219

 

 

 

596,456

 

Investments in affiliated companies

 

62,138

 

 

 

65,112

 

Intangible assets, net

 

142,917

 

 

 

159,137

 

Goodwill

 

2,044,214

 

 

 

2,027,626

 

Other assets

 

597,204

 

 

 

574,511

 

Total assets

$

20,535,899

 

 

$

21,763,182

 

LIABILITIES AND EQUITY

 

 

 

Current liabilities:

 

 

 

Accounts payable

$

8,981,212

 

 

$

10,460,419

 

Accrued expenses

 

1,199,924

 

 

 

1,339,302

 

Short-term borrowings, including current portion of long-term debt

 

488,168

 

 

 

589,883

 

Total current liabilities

 

10,669,304

 

 

 

12,389,604

 

Long-term debt

 

3,672,828

 

 

 

3,182,964

 

Other liabilities

 

539,293

 

 

 

579,261

 

 

 

 

 

Equity:

 

 

 

Shareholders’ equity:

 

 

 

Common stock, par value $1:

 

 

 

Authorized - 160,000 shares in both 2023 and 2022

 

 

 

Issued - 125,424 shares in both 2023 and 2022

 

125,424

 

 

 

125,424

 

Capital in excess of par value

 

1,203,064

 

 

 

1,208,708

 

Treasury stock (69,762 and 66,175 shares in 2023 and 2022, respectively), at cost

 

(5,108,188

)

 

 

(4,637,345

)

Retained earnings

 

9,725,141

 

 

 

9,214,832

 

Accumulated other comprehensive loss

 

(359,096

)

 

 

(365,262

)

Total shareholders’ equity

 

5,586,345

 

 

 

5,546,357

 

Noncontrolling interests

 

68,129

 

 

 

64,996

 

Total equity

 

5,654,474

 

 

 

5,611,353

 

Total liabilities and equity

$

20,535,899

 

 

$

21,763,182

 

ARROW ELECTRONICS, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

(Unaudited)

 

 

 

Quarter Ended

 

July 1, 2023

 

July 2, 2022

Cash flows from operating activities:

 

 

 

Consolidated net income

$

237,791

 

 

$

371,495

 

Adjustments to reconcile consolidated net income to net cash provided by (used for) operations:

 

 

 

Depreciation and amortization

 

46,264

 

 

 

47,252

 

Amortization of stock-based compensation

 

8,852

 

 

 

13,885

 

Equity in earnings of affiliated companies

 

(3,061

)

 

 

(2,165

)

Deferred income taxes

 

(25,869

)

 

 

(8,036

)

(Gain) loss on investments, net

 

(497

)

 

 

9,744

 

Other

 

1,665

 

 

 

1,680

 

Change in assets and liabilities:

 

 

 

Accounts receivable, net

 

(377,117

)

 

 

(464,917

)

Inventories

 

58,148

 

 

 

(294,990

)

Accounts payable

 

(8,558

)

 

 

162,366

 

Accrued expenses

 

(83,267

)

 

 

103,764

 

Other assets and liabilities

 

18,845

 

 

 

(22,660

)

Net cash used for operating activities

 

(126,804

)

 

 

(82,582

)

Cash flows from investing activities:

 

 

 

Acquisition of property, plant, and equipment

 

(16,991

)

 

 

(16,974

)

Proceeds from collections of notes receivable

 

95

 

 

 

373

 

Net cash used for investing activities

 

(16,896

)

 

 

(16,601

)

Cash flows from financing activities:

 

 

 

Change in short-term and other borrowings

 

344,389

 

 

 

310,315

 

(Repayments of) proceeds from long-term bank borrowings, net

 

(43,786

)

 

 

65,000

 

Proceeds from exercise of stock options

 

10,447

 

 

 

4,370

 

Repurchases of common stock

 

(212,416

)

 

 

(219,532

)

Settlement of forward-starting interest rate swap

 

56,711

 

 

 

 

Other

 

(2,474

)

 

 

(137

)

Net cash provided by financing activities

 

152,871

 

 

 

160,016

 

Effect of exchange rate changes on cash

 

25,657

 

 

 

(78,028

)

Net increase (decrease) in cash and cash equivalents

 

34,828

 

 

 

(17,195

)

Cash and cash equivalents at beginning of period

 

205,554

 

 

 

242,791

 

Cash and cash equivalents at end of period

$

240,382

 

 

$

225,596

 

ARROW ELECTRONICS, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

(Unaudited)

 

 

 

Six Months Ended

 

July 1, 2023

 

July 2, 2022

Cash flows from operating activities:

 

 

 

Consolidated net income

$

513,116

 

 

$

737,491

 

Adjustments to reconcile consolidated net income to net cash provided by (used for) operations:

 

 

 

Depreciation and amortization

 

92,943

 

 

 

95,557

 

Amortization of stock-based compensation

 

28,349

 

 

 

31,236

 

Equity in earnings of affiliated companies

 

(2,981

)

 

 

(3,008

)

Deferred income taxes

 

(33,399

)

 

 

(6,684

)

(Gain) loss on investments, net

 

(10,808

)

 

 

7,733

 

Other

 

2,986

 

 

 

2,366

 

Change in assets and liabilities:

 

 

 

Accounts receivable, net

 

1,324,772

 

 

 

(34,207

)

Inventories

 

(141,373

)

 

 

(755,892

)

Accounts payable

 

(1,513,259

)

 

 

(315,459

)

Accrued expenses

 

(215,583

)

 

 

60,123

 

Other assets and liabilities

 

52,237

 

 

 

(102,086

)

Net cash provided by (used for) operating activities

 

97,000

 

 

 

(282,830

)

Cash flows from investing activities:

 

 

 

Acquisition of property, plant, and equipment

 

(37,105

)

 

 

(36,244

)

Proceeds from collections of notes receivable

 

237

 

 

 

20,542

 

Proceeds from settlement of net investment hedge

 

10,725

 

 

 

 

Net cash used for investing activities

 

(26,143

)

 

 

(15,702

)

Cash flows from financing activities:

 

 

 

Change in short-term and other borrowings

 

198,339

 

 

 

296,022

 

(Repayments of) proceeds from long-term bank borrowings, net

 

(9,426

)

 

 

910,000

 

Net proceeds from note offering

 

496,268

 

 

 

 

Redemption of notes

 

(300,000

)

 

 

(350,000

)

Proceeds from exercise of stock options

 

16,381

 

 

 

15,672

 

Repurchases of common stock

 

(516,217

)

 

 

(483,963

)

Settlement of forward-starting interest rate swap

 

56,711

 

 

 

 

Other

 

(142

)

 

 

(137

)

Net cash (used for) provided by financing activities

 

(58,086

)

 

 

387,594

 

Effect of exchange rate changes on cash

 

50,696

 

 

 

(85,660

)

Net increase in cash and cash equivalents

 

63,467

 

 

 

3,402

 

Cash and cash equivalents at beginning of period

 

176,915

 

 

 

222,194

 

Cash and cash equivalents at end of period

$

240,382

 

 

$

225,596

 

ARROW ELECTRONICS, INC.

NON-GAAP SALES RECONCILIATION

(In thousands)

(Unaudited)

 

Quarter Ended

 

 

 

July 1, 2023

 

July 2, 2022

 

% Change

 

 

 

 

 

 

Consolidated sales, as reported

$

8,514,516

 

$

9,460,842

 

 

(10.0

)%

Impact of changes in foreign currencies

 

 

 

(17,566

)

 

 

Consolidated sales, constant currency

$

8,514,516

 

$

9,443,276

 

 

(9.8

)%

 

 

 

 

 

 

Global components sales, as reported

$

6,682,882

 

$

7,461,552

 

 

(10.4

)%

Impact of changes in foreign currencies

 

 

 

(18,723

)

 

 

Global components sales, constant currency

$

6,682,882

 

$

7,442,829

 

 

(10.2

)%

 

 

 

 

 

 

Americas components sales, as reported

$

2,066,562

 

$

2,479,362

 

 

(16.6

)%

Impact of changes in foreign currencies

 

 

 

(603

)

 

 

Americas components sales, constant currency

$

2,066,562

 

$

2,478,759

 

 

(16.6

)%

 

 

 

 

 

 

Asia components sales, as reported

$

2,462,841

 

$

3,173,786

 

 

(22.4

)%

Impact of changes in foreign currencies

 

 

 

(41,205

)

 

 

Asia components sales, constant currency

$

2,462,841

 

$

3,132,581

 

 

(21.4

)%

 

 

 

 

 

 

Europe components sales, as reported

$

2,153,479

 

$

1,808,404

 

 

19.1

%

Impact of changes in foreign currencies

 

 

 

23,085

 

 

 

Europe components sales, constant currency

$

2,153,479

 

$

1,831,489

 

 

17.6

%

 

 

 

 

 

 

Global ECS sales, as reported

$

1,831,634

 

$

1,999,290

 

 

(8.4

)%

Impact of changes in foreign currencies

 

 

 

1,157

 

 

 

Global ECS sales, constant currency

$

1,831,634

 

$

2,000,447

 

 

(8.4

)%

 

 

 

 

 

 

Americas ECS sales, as reported

$

1,000,506

 

$

1,160,796

 

 

(13.8

)%

Impact of changes in foreign currencies

 

 

 

(7,376

)

 

 

Americas ECS sales, constant currency

$

1,000,506

 

$

1,153,420

 

 

(13.3

)%

 

 

 

 

 

 

Europe ECS sales, as reported

$

831,128

 

$

838,494

 

 

(0.9

)%

Impact of changes in foreign currencies

 

 

 

8,533

 

 

 

Europe ECS sales, constant currency

$

831,128

 

$

847,027

 

 

(1.9

)%

ARROW ELECTRONICS, INC.

NON-GAAP SALES RECONCILIATION

(In thousands)

(Unaudited)

 

Six Months Ended

 

 

 

July 1, 2023

 

July 2, 2022

 

% Change

 

 

 

 

 

 

Consolidated sales, as reported

$

17,250,944

 

$

18,534,967

 

 

(6.9

)%

Impact of changes in foreign currencies

 

 

 

(220,344

)

 

 

Consolidated sales, constant currency

$

17,250,944

 

$

18,314,623

 

 

(5.8

)%

 

 

 

 

 

 

Global components sales, as reported

$

13,538,675

 

$

14,660,627

 

 

(7.7

)%

Impact of changes in foreign currencies

 

 

 

(164,716

)

 

 

Global components sales, constant currency

$

13,538,675

 

$

14,495,911

 

 

(6.6

)%

 

 

 

 

 

 

Americas components sales, as reported

$

4,300,015

 

$

4,819,905

 

 

(10.8

)%

Impact of changes in foreign currencies

 

 

 

(2,297

)

 

 

Americas components sales, constant currency

$

4,300,015

 

$

4,817,608

 

 

(10.7

)%

 

 

 

 

 

 

Asia components sales, as reported

$

4,839,036

 

$

6,105,315

 

 

(20.7

)%

Impact of changes in foreign currencies

 

 

 

(87,707

)

 

 

Asia components sales, constant currency

$

4,839,036

 

$

6,017,608

 

 

(19.6

)%

 

 

 

 

 

 

Europe components sales, as reported

$

4,399,624

 

$

3,735,407

 

 

17.8

%

Impact of changes in foreign currencies

 

 

 

(74,712

)

 

 

Europe components sales, constant currency

$

4,399,624

 

$

3,660,695

 

 

20.2

%

 

 

 

 

 

 

Global ECS sales, as reported

$

3,712,269

 

$

3,874,340

 

 

(4.2

)%

Impact of changes in foreign currencies

 

 

 

(55,628

)

 

 

Global ECS sales, constant currency

$

3,712,269

 

$

3,818,712

 

 

(2.8

)%

 

 

 

 

 

 

Americas ECS sales, as reported

$

1,998,620

 

$

2,208,645

 

 

(9.5

)%

Impact of changes in foreign currencies

 

 

 

(15,946

)

 

 

Americas ECS sales, constant currency

$

1,998,620

 

$

2,192,699

 

 

(8.9

)%

 

 

 

 

 

 

Europe ECS sales, as reported

$

1,713,649

 

$

1,665,695

 

 

2.9

%

Impact of changes in foreign currencies

 

 

 

(39,682

)

 

 

Europe ECS sales, constant currency

$

1,713,649

 

$

1,626,013

 

 

5.4

%

ARROW ELECTRONICS, INC.

NON-GAAP EARNINGS RECONCILIATION

(In thousands except per share data)

(Unaudited)

 

Three months ended July 1, 2023

 

Reported

GAAP

measure

 

Intangible

amortization

expense

 

Restructuring

& Integration

charges

 

Non-recurring

tax items

 

Other(1)

 

Non-GAAP

measure

Operating income

$

392,250

 

 

$

7,908

 

$

10,333

 

$

 

 

$

 

 

$

410,491

 

Income before income taxes

 

310,171

 

 

 

7,908

 

 

10,333

 

 

 

 

 

(497

)

 

 

327,915

 

Provision for income taxes

 

72,380

 

 

 

1,992

 

 

2,597

 

 

(942

)

 

 

(119

)

 

 

75,908

 

Consolidated net income

 

237,791

 

 

 

5,916

 

 

7,736

 

 

942

 

 

 

(378

)

 

 

252,007

 

Noncontrolling interests

 

1,232

 

 

 

136

 

 

 

 

 

 

 

 

 

 

1,368

 

Net income attributable to shareholders

$

236,559

 

 

$

5,780

 

$

7,736

 

$

942

 

 

$

(378

)

 

$

250,639

 

Net income per diluted share (2)

$

4.12

 

 

$

0.10

 

$

0.13

 

$

0.02

 

 

$

(0.01

)

 

$

4.37

 

Effective tax rate (3)

 

23.3

%

 

 

 

 

 

 

 

 

 

 

23.1

%

 

 

 

 

 

 

 

 

 

 

 

 

Three months ended July 2, 2022

 

Reported

GAAP

measure

 

Intangible

amortization

expense

 

Restructuring

& Integration

charges

 

Non-recurring

tax items

 

Other(1)

 

Non-GAAP

measure

Operating income

$

532,828

 

 

$

8,830

 

$

2,494

 

$

 

 

$

 

 

$

544,152

 

Income before income taxes

 

485,908

 

 

 

8,830

 

 

2,494

 

 

 

 

 

9,744

 

 

 

506,976

 

Provision for income taxes

 

114,413

 

 

 

2,263

 

 

362

 

 

 

 

 

2,356

 

 

 

119,394

 

Consolidated net income

 

371,495

 

 

 

6,567

 

 

2,132

 

 

 

 

 

7,388

 

 

 

387,582

 

Noncontrolling interests

 

1,161

 

 

 

133

 

 

 

 

 

 

 

 

 

 

1,294

 

Net income attributable to shareholders

$

370,334

 

 

$

6,434

 

$

2,132

 

$

 

 

$

7,388

 

 

$

386,288

 

Net income per diluted share (2)

$

5.54

 

 

$

0.10

 

$

0.03

 

$

 

 

$

0.11

 

 

$

5.78

 

Effective tax rate (3)

 

23.5

%

 

 

 

 

 

 

 

 

 

 

23.6

%

ARROW ELECTRONICS, INC.

NON-GAAP EARNINGS RECONCILIATION

(In thousands except per share data)

(Unaudited)

Six months ended July 1, 2023

 

 

 

 

 

 

 

 

 

 

 

 

 

Reported

GAAP

measure

 

Intangible

amortization

expense

 

Restructuring

& Integration

charges

 

Non-recurring

tax items

 

Other(1)

 

Non-GAAP

measure

Operating income

$

814,402

 

 

$

15,888

 

$

12,893

 

$

 

 

$

 

 

$

843,183

 

Income before income taxes

 

662,043

 

 

 

15,888

 

 

12,893

 

 

 

 

 

(10,808

)

 

 

680,016

 

Provision for income taxes

 

148,927

 

 

 

4,002

 

 

3,317

 

 

(942

)

 

 

(2,590

)

 

 

152,714

 

Consolidated net income

 

513,116

 

 

 

11,886

 

 

9,576

 

 

942

 

 

 

(8,218

)

 

 

527,302

 

Noncontrolling interests

 

2,807

 

 

 

270

 

 

 

 

 

 

 

 

 

 

3,077

 

Net income attributable to shareholders

$

510,309

 

 

$

11,616

 

$

9,576

 

$

942

 

 

$

(8,218

)

 

$

524,225

 

Net income per diluted share (2)

$

8.74

 

 

$

0.20

 

$

0.16

 

$

0.02

 

 

$

(0.14

)

 

$

8.98

 

Effective tax rate (3)

 

22.5

%

 

 

 

 

 

 

 

 

 

 

22.5

%

 

 

 

 

 

 

 

 

 

 

 

 

Six months ended July 2, 2022

 

Reported

GAAP

measure

 

Intangible

amortization

expense

 

Restructuring

& Integration

charges

 

Non-recurring

tax items

 

Other(1)

 

Non-GAAP

measure

Operating income

$

1,043,204

 

 

$

17,848

 

$

7,392

 

$

 

 

$

 

 

$

1,068,444

 

Income before income taxes

 

964,264

 

 

 

17,848

 

 

7,392

 

 

 

 

 

7,733

 

 

 

997,237

 

Provision for income taxes

 

226,773

 

 

 

4,573

 

 

1,567

 

 

 

 

 

1,870

 

 

 

234,783

 

Consolidated net income

 

737,491

 

 

 

13,275

 

 

5,825

 

 

 

 

 

5,863

 

 

 

762,454

 

Noncontrolling interests

 

2,408

 

 

 

273

 

 

 

 

 

 

 

 

 

 

2,681

 

Net income attributable to shareholders

$

735,083

 

 

$

13,002

 

$

5,825

 

$

 

 

$

5,863

 

 

$

759,773

 

Net income per diluted share (2)

$

10.84

 

 

$

0.19

 

$

0.09

 

$

 

 

$

0.09

 

 

$

11.21

 

Effective tax rate (3)

 

23.5

%

 

 

 

 

 

 

 

 

 

 

23.5

%

(1)

 

Other includes (gain) loss on investments, net.

(2)

 

The sum of the components for diluted EPS, as adjusted may not agree to totals, as presented, due to rounding.

(3)

 

The items as shown in this table, represent the reconciling items for the tax rate as reported by GAAP measure and as a non-GAAP measure.

ARROW ELECTRONICS, INC.

SEGMENT INFORMATION

(In thousands)

(Unaudited)

 

 

 

 

 

Quarter Ended

 

Six Months Ended

 

July 1, 2023

 

July 2, 2022

 

July 1, 2023

 

July 2, 2022

Sales:

 

 

 

 

 

 

 

Global components

$

6,682,882

 

 

$

7,461,552

 

 

$

13,538,675

 

 

$

14,660,627

 

Global ECS

 

1,831,634

 

 

 

1,999,290

 

 

 

3,712,269

 

 

 

3,874,340

 

Consolidated

$

8,514,516

 

 

$

9,460,842

 

 

$

17,250,944

 

 

$

18,534,967

 

Operating income (loss):

 

 

 

 

 

 

 

Global components

$

381,314

 

 

$

524,494

 

 

$

798,853

 

 

$

1,023,836

 

Global ECS

 

86,228

 

 

 

83,970

 

 

 

167,327

 

 

 

169,768

 

Corporate (a)

 

(75,292

)

 

 

(75,636

)

 

 

(151,778

)

 

 

(150,400

)

Consolidated

$

392,250

 

 

$

532,828

 

 

$

814,402

 

 

$

1,043,204

 

(a)

 

Corporate operating loss includes restructuring, integration, and other charges of $10.3 million and $12.9 million for the second quarter and first six months of 2023, respectively, and $2.5 million and $7.4 million for the second quarter and first six months of 2022, respectively.

NON-GAAP SEGMENT RECONCILIATION

 

 

 

 

 

Quarter Ended

 

Six Months Ended

 

July 1, 2023

 

July 2, 2022

 

July 1, 2023

 

July 2, 2022

 

 

 

 

 

 

 

 

Global components operating income, as reported

$

381,314

 

$

524,494

 

$

798,853

 

$

1,023,836

Intangible assets amortization expense

 

6,679

 

 

6,739

 

 

13,424

 

 

13,612

Global components non-GAAP operating income

$

387,993

 

$

531,233

 

$

812,277

 

$

1,037,448

 

 

 

 

 

 

 

 

Global ECS operating income, as reported

$

86,228

 

$

83,970

 

$

167,327

 

$

169,768

Intangible assets amortization expense

 

1,229

 

 

2,091

 

 

2,464

 

 

4,236

Global ECS non-GAAP operating income

$

87,457

 

$

86,061

 

$

169,791

 

$

174,004

 

Contacts

Investors:

Anthony Bencivenga,

Vice President, Investor Relations

303-566-7456

Media:

John Hourigan,

Vice President, Public Affairs and Corporate Marketing

303-824-4586

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